CUSTOM POST TYPES
These were poorly named. Think: Custom Content Types. That is, non-post content. Examples: employees, products, attachments, menu items, pages, pets. If you want it to show up in your site’s main RSS feed, then it’s probably not a custom post type.

POST FORMATS
A Post Format is a formatting designation made to a post. For example, a post could be a short “aside,” or a Kottke.org-style link post, or a video post, or a photo gallery post. The data you input might be slightly different — video post should contain a video, an aside should probably not be very long, a link post should have a link. And the way that the post is displayed on the site might be very different — an aside will typically be displayed without a title, a link post may have the title point to the link. A video post may be wider, or have social sharing buttons auto-appended. But they’re all still posts. They still show up in your feed, and you still find them in the Posts section of the WordPress backend.